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It's a Trap! Beware the Anti-Toggle Rule under I.R.C. § 409A
By on May 31, 2017
Companies often utilize deferred compensation arrangements to incentivize their workers to use their best efforts to grow the value of those companies. If a company provides a worker with a legally binding right to payment that will be received in a future year, that arrangement generally constitutes a nonqualified deferred compensation plan. As such, the plan must satisfy all of the requirements under I.R.C. § 409A in order to avoid potentially disastrous tax consequences to the worker.
Payroll and Human Resources Departments Beware: An Update on an Identity Theft Scam
By on May 30, 2017
On March 1, 2016 the IRS issued IR-2016-34, alerting "payroll and human resources professionals to beware of an emerging phishing email scheme that purports to be from company executives and requests personal information on employees." Recent information indicates that cybercriminals have increased the use of this phishing email in 2017. Identity theft and phishing are both on the 2017 IRS Dirty Dozen List.
By on May 26, 2017
Most clients and many attorneys are unfamiliar with the concept of community property-that is, how it works and how it affects a broad spectrum of legal practices including family law, tax law and estate planning. For attorneys with diverse clients and multijurisdictional practices, ignorance of community property law can be costly. This article provides an introduction to the community property system and highlights topics to discuss with clients planning a move either to or from a community property state.
By on May 23, 2017
It is commonly known that sales of partnerships can give rise to ordinary income (subject to a current maximum tax rate of 39.6%) and long-term capital gain (subject to a current maximum tax rate of 20%). This is true regardless of whether the transaction consists of the partnership's sale of its assets or the partners' sale of their ownership interests in the partnership. Tax professionals can assist their clients in maximizing the long-term capital gain recognized from a sale of a partnership by negotiating an allocation of more of the sales proceeds to long-term capital gain assets and less of the sales proceeds to "hot assets," such as inventory, accounts receivables, and depreciation recapture.
IRS Extends Disclosure Deadline for Newly "Listed" Syndicated Conservation Easement Deals
By on May 5, 2017
At the close of 2016, the IRS' contempt for syndicated conservation easement deals reached its peak with the IRS identifying such transactions as "listed transactions." See prior MC Talks Tax blog post dated December 27, 2016, "The IRS Adds Conservation Easements to the List of Tax Avoidance Transactions."
Enhanced IRS Scrutiny of Compensation in Closely-Held Businesses (Video Included)
By on May 4, 2017
The IRS is stacking-up victories in its attack against compensation arrangements of closely held business, with C corporations, S corporations, and partnerships all potentially facing an IRS challenge. Now is the time to engage your owner-operated business clients in a discussion about compensation and ways to potentially enhance existing arrangements and bolster defenses in the event of an IRS challenge.
By on May 4, 2017
Last year IRS Chief Counsel declared that a "partnership is not a corporation" and that the "wage and reasonable compensation rules which are applicable to corporations…do not apply." Therefore once a partner is no longer a "passive investor," his or her entire distributive share of partnership income is subject to self-employment tax. IRS Chief Counsel Advice 201640014
